Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).

Yes ¨ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act (check one):

Large accelerated filer ¨

Accelerated filer ¨

Non-accelerated filer þ

Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).

Yes ¨ No þ

As of October 26, 2009, there were 76,844,571 shares of Class A common stock
outstanding and 127,655,429 shares of Class B common stock outstanding.

Mead Johnson Nutrition Company (MJN or the Company) manufactures, distributes and sells infant formulas, childrens nutrition and other nutritional products. MJN has a broad product portfolio, which
extends across routine and specialty infant formulas, childrens milks and milk modifiers, pediatric vitamins, dietary supplements for pregnant and breastfeeding mothers, and products for metabolic disorders. These products are generally sold
to wholesalers and retailers and are promoted to healthcare professionals, and, where permitted by regulation or policy, directly to consumers.

2. SEPARATION ACTIVITIES AND INITIAL PUBLIC OFFERING

MJN historically operated as a
wholly owned subsidiary of Bristol-Myers Squibb Company (BMS). On January 31, 2009, BMS transferred to MJN the non-U.S. businesses of MJN through a sale of shares, sale of assets and contributions of stock with some exceptions as described
below. The consideration for these transfers was in the form of cash, which was contributed or otherwise provided by BMS, and the issuance by MJNs subsidiaries of foreign intercompany notes to BMS subsidiaries related to the purchase of assets
or shares in Indonesia, Malaysia, the Netherlands and the Philippines. The terms of these foreign intercompany notes were substantially similar, except that the principal amount of each note varied by jurisdiction. The aggregate principal amount of
the foreign intercompany notes was $597.0 million and the rate of interest per annum on each note was equal to LIBOR plus 0.75%.

Also on
January 31, 2009, MJN entered into an employee matters agreement with BMS that included the allocation of assets and liabilities related to certain employee benefit, pension, welfare, compensation, employment, severance and termination-related
matters.

On February 17, 2009, MJN completed the initial public offering (IPO) of 34.5 million shares of Class A common stock
at a price of $24.00 per share. The net proceeds from the IPO, after deducting a total of $45.7 million of underwriting discounts, commissions and offering expenses, totaled $782.3 million. All of the net proceeds of the IPO were paid to BMS and
were used to (i) repay in full $597.0 million of the foreign intercompany notes payable to subsidiaries of BMS and (ii) satisfy payables and other obligations owing to one or more subsidiaries of BMS.

Immediately following the IPO, there were 76.8 million outstanding shares of Class A common stock and 127.7 million outstanding shares of
Class B common stock. The holders of Class A common stock and Class B common stock generally have identical rights, except that holders of Class A common stock are entitled to one vote per share while holders of Class B common stock are
entitled to 10 votes per share on all matters voted upon by stockholders (including the election and removal of directors). Of the outstanding Class A and Class B common stock, BMS beneficially owned 42.3 million shares of Class A
common stock and all of the Class B common stock. This represented 83.1% of the total outstanding shares of combined common stock, and 97.5% of the combined voting power. MJN sold 34.5 million shares of Class A common stock, or 16.9% of
the total outstanding shares of combined common stock, to the public.

Expensed transaction costs for the IPO and separation from BMS recorded
within marketing, selling, and administrative expense over the three and nine months ended September 30, 2009, were $7.2 million and $31.3 million, respectively, compared to $13.8 million and $14.0 million for the three and nine months
ended September 30, 2008, respectively.

3. ACCOUNTING POLICIES

Basis of PresentationPrior to the IPO, the financial statements were derived from the consolidated financial statements and records of BMS,
principally from statements and records representing the MJN business. The Company prepared the accompanying unaudited consolidated financial statements in accordance with accounting principles generally accepted in the United States of America
(GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X issued by the Securities and Exchange Commission (SEC). Under those rules, certain footnotes and other financial information that are
normally required by GAAP for annual financial statements have been condensed or omitted. The Company is responsible for the financial statements included in the Form 10-Q.

The consolidated financial statements include all of the normal and recurring adjustments necessary for a fair presentation of the Companys financial position at September 30, 2009, and
December 31, 2008, the results of operations for the three and nine months ended September 30, 2009 and 2008, and its cash flows for the nine months ended September 30, 2009, and 2008. Material subsequent events are evaluated for
disclosure up to the time of issuance of the financial statements, October 28, 2009. Certain prior-year amounts have been reclassified to conform to the current-year presentation, including accrued interest payable to BMS of $43.1 million as of
December 31, 2008, that was reclassified from accrued expenses to related party payables-net.

The Companys unaudited interim results of operations, financial position and cash flows may not be
indicative of its future performance and do not necessarily reflect what its combined results of operations, financial position and cash flows would have been had the Company operated as a separate, stand-alone entity during the periods presented.

The accounting policies used in preparing these consolidated financial statements are the same as those used to prepare the Companys
2008 Annual Report on Form 10-K (2008 Form 10-K), with the exception of the accounting policies adopted in 2009. These consolidated unaudited financial statements and the related notes should be read in conjunction with the year-end
financial statements and accompanying notes included in the Companys 2008 Form 10-K.

Cash and Cash EquivalentsCash and
cash equivalents consist of bank deposits, time deposits and money market funds. Cash equivalents are primarily highly liquid investments with original maturities of three months or less at the time of purchase and are recorded at cost, which
approximates fair value. The Company maintains cash and cash equivalent balances in U.S. dollars and foreign currencies which are subject to currency rate risk.

Income TaxesThe income tax provision prepared in the post-IPO period reflects a separate return methodology based on the actual legal entity structure as if the Company were a separate
taxpayer in the respective jurisdictions with certain accommodations pursuant to a tax matters agreement as noted below. This is in contrast to the pre-IPO period in which the income tax provision was prepared on a separate return stand-alone
methodology reflecting a hypothetical legal entity structure in which the Company was included in the tax grouping of other BMS entities within the respective entitys tax jurisdiction.

The provision for income taxes has been determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred
taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. The provision for income taxes represents income taxes paid or payable for the current year plus the change in
deferred taxes during the year. Deferred taxes result from differences between the financial and tax bases of the Companys assets and liabilities. Deferred tax assets and liabilities are measured using the currently enacted tax rates that
apply to taxable earnings in effect for the years in which those tax attributes are expected to be recovered or paid, and are adjusted for changes in tax rates and tax laws when changes are enacted.

Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. The assessment of
whether or not a valuation allowance is required often requires significant judgment including the long-range forecast of future taxable earnings and the evaluation of tax planning initiatives. Adjustments to the deferred tax valuation allowances
are made to earnings in the period when such assessments are made.

Interest and penalties are classified as a component of provision for
income taxes.

Effective February 10, 2009, MJN entered into a tax matters agreement with BMS to allocate the responsibility of BMS
and its subsidiaries, on the one hand, and MJN, on the other hand, for the payment of taxes resulting from filing (i) tax returns on a combined, consolidated or unitary basis and (ii) single entity tax returns for entities that have both
MJN and non-MJN operations. Pursuant to this tax matters agreement, BMS prepares returns for MJN for all periods during which MJN is included in a combined, consolidated or unitary group with BMS or any of its subsidiaries for federal, state, local
or foreign tax purposes, as if MJN itself were filing as a combined, consolidated or unitary group. BMS also prepares returns for the Company for all periods during which a single-entity tax return is filed for an entity that has both MJN and
non-MJN operations. MJN makes payments to BMS and BMS makes payments to the Company with respect to such returns, as if such returns were actually required to be filed under the laws of the applicable taxing jurisdiction and BMS were the relevant
taxing authority of such jurisdiction. If and when MJN ceases to be included in BMS consolidated tax returns, BMS will compensate the Company for tax attributes for which MJN was not previously compensated and that BMS used, and MJN will
reimburse BMS for tax attributes for which MJN was previously compensated but that BMS never used.

Earnings Per ShareThe
numerator for basic and diluted earnings per share is net earnings attributable to shareholders reduced by dividends and undistributed earnings attributable to unvested shares. The denominator for basic earnings per share is the weighted
average number of common stock outstanding during the period. The denominator for diluted earnings per share is the weighted average shares outstanding adjusted for the effect of dilutive stock options, restricted stock units and performance share
awards. For the periods prior to the Companys IPO, the weighted average common shares outstanding is calculated using 170.0 million shares of Class A and Class B common stock outstanding, which is the number of shares owned by
BMS immediately prior to the IPO. The same number of shares has been used to calculate basic earnings per share and diluted earnings per share for the periods prior to the IPO as no MJN stock options, restricted stock units, or performance shares
were outstanding prior to the IPO.

Recently Issued Accounting StandardsIn June 2009, the Financial Accounting Standards Board
(FASB) issued the FASB Accounting Standards Codification and the Hierarchy of GAAP (Codification). The Codification is the single official source of

authoritative U.S. accounting and reporting standards applicable for all nongovernmental entities, with the exception of guidance issued by the Securities and Exchange Commission. The
Codification did not change GAAP, but organized it into an online research system sorted by individual accounting topics, which are further divided into subtopics. The FASB now issues new standards in the form of Accounting Standards Updates. The
Codification is effective for financial statements issued for periods ending after September 15, 2009. The adoption of the Codification did not have a material impact on the Companys financial statements.

Effective January 1, 2009, the Company adopted Accounting Standards Codification (ASC) No. 805, Business Combinations. ASC No. 805 requires
recognition of assets acquired, liabilities assumed, and any non-controlling interest in the acquiree at the acquisition date, measured at their fair values as of that date. In a business combination achieved in stages, this topic requires
recognition of identifiable assets and liabilities, as well as the non-controlling interest in the acquiree, at the full amounts of their fair values. This topic also requires the fair value of acquired in-process research and development to be
recorded as indefinite lived intangibles, contingent consideration to be recorded on the acquisition date, and restructuring and acquisition-related deal costs to be expensed as incurred. In addition, any excess of the fair value of net assets
acquired over purchase price and any subsequent changes in estimated contingencies are to be recorded in earnings. This topic applies to business combinations occurring on or after January 1, 2009. The Companys adoption of ASC 805 did not
have a material effect on the Companys financial statements.

Effective January 1, 2009, the Company adopted ASC No. 820,
Fair Value Measurements, with respect to non-financial assets and liabilities. This topic defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. The Companys adoption of
ASC 820 did not have a material effect on the Companys financial statements.

Effective January 1, 2009, the Company
retrospectively adopted ASC No. 810, Consolidation. ASC No. 810 requires the ownership interests in subsidiaries held by parties other than the parent be clearly identified, labeled and presented in the consolidated statement of
financial position within equity, but separate from the parents equity. This topic also requires the amount of consolidated net earnings attributable to the parent and to the noncontrolling interest be clearly identified and presented on the
face of the consolidated statement of earnings. Changes in a parents ownership interest while the parent retains its controlling financial interest in its subsidiary must be accounted for consistently, and when a subsidiary is deconsolidated,
any retained noncontrolling equity investment in the former subsidiary must be initially measured at fair value. This topic also requires entities to provide sufficient disclosures that clearly identify and distinguish between the interests of the
parent and the interests of the noncontrolling owners.

Effective January 1, 2009, the Company adopted ASC No. 815-10-65-1,
Derivatives and Hedging, requiring that objectives for using derivative instruments be disclosed in terms of underlying risk and accounting designation. The fair value of derivative instruments and their gains and losses are presented in tabular
format in order to present a more complete picture of the effects of using derivative instruments.

Effective June 30, 2009, the Company
adopted ASC No. 855, Subsequent Events. ASC No. 855 includes guidance for the accounting and disclosure of events that happen after the date of the balance sheet but before the release of the financial statements. The adoption of
this topic did not have a material effect on the Companys consolidated financial statements.

In June 2009, the FASB issued Statement of
Financial Accounting Standards (SFAS) No. 166, Accounting for Transfers of Financial Assets, an amendment of SFAS No. 140. Among other items, SFAS No. 166 removes the concept of a qualifying special-purpose entity and clarifies
that the objective of paragraph 9 of SFAS No. 140 is to determine whether a transferor and all the entities included in the transferors financial statements being presented have surrendered control over transferred financial assets. SFAS
No. 166 is effective for the Company January 1, 2010. The Company does not expect the adoption of this pronouncement to have a material effect on the consolidated financial statements.

In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R) (FIN 46(R)). SFAS No. 167 amends FIN 46(R) in
determining whether an enterprise has a controlling financial interest in a variable interest entity. This determination identifies the primary beneficiary of a variable interest entity as the enterprise that has both the power to direct the
activities of a variable interest entity that most significantly impacts the entitys economic performance, and the obligation to absorb losses or the right to receive benefits of the entity that could potentially be significant to the variable
interest entity. SFAS No. 167 also requires ongoing reassessments of whether an enterprise is the primary beneficiary and eliminates the quantitative approach previously required for determining the primary beneficiary. SFAS No. 167 is
effective for the Company January 1, 2010. The Company does not expect the adoption of this pronouncement to have a material effect on the consolidated financial statements.

4. RELATED PARTIES

These
financial statements include transactions with affiliated companies. MJN entered into transactions with BMS and its subsidiaries for the sale of inventory and services provided to and received from BMS pharmaceutical divisions in various markets
worldwide, as well as corporate services provided by BMS for the financial statement periods presented. Product transfers from BMS to MJN were made at various transfer prices. Related party payables-net includes $53.7 million in related party
receivables as of September 30, 2009. There were no related party receivables as of December 31, 2008. Related party dividends of $34.0 million are excluded from the related party payables-net balance and presented in dividends
payable.

Prior to the IPO, the Company had no sales to related parties. For the three months ended September 30, 2009, MJN had
related party sales to BMS of $22.0 million. For the period subsequent to the IPO through September 30, 2009, MJN had related party sales to BMS of $67.3 million.

Purchases of goods from BMS and its subsidiaries were $0.2 million and $2.4 million for the three and nine months ended September 30, 2009, respectively, compared to $5.9 million and $19.6
million for the three and nine months ended September 30, 2008, respectively.

Prior to the IPO, the Company was allocated costs for
various services from BMS. On January 31, 2009, MJN entered into a Transitional Services Agreement (TSA) with BMS whereby BMS agreed to provide MJN with various corporate support services (the BMS Services) and MJN agreed to provide BMS with
certain services (the MJN Services). The BMS Services and the MJN Services will continue for a specified initial term, which will vary with the types of services to be provided, unless earlier terminated or extended according to the terms of the
TSA. MJN will pay BMS mutually agreed-upon fees for the BMS Services and BMS will pay MJN mutually agreed-upon fees for the MJN Services. The annual cost to MJN is $19.3 million for services that have terms of up to 18 months, $66.4 million for
services that have terms from 18 months up to three years, and $2.9 million for services that have terms greater than three years. The annual cost charged by MJN to BMS for services is $23.6 million, the majority of which have terms of up to
eighteen months. The statement of earnings for the nine months ended September 30, 2009, includes one month of costs allocated from BMS and eight months of expenses related to the TSA. Total net costs for the three and nine months ended
September 30, 2009, were $14.3 million and $43.8 million, respectively. For the similar periods ending September 30, 2008, total net costs to MJN were $39.1 million and $93.0 million as allocated from BMS based on either the ratio of
MJNs annual net sales or headcount to BMS comparable consolidated net sales or headcount.

On August 26, 2008, MJN declared
and issued a dividend in the form of a 10-year intercompany note to BMS in the amount of $2.0 billion, which was recorded as a reduction of equity. The note had an annual interest rate of 6.1% with interest payments settled no less than annually.

On February 17, 2009, this related party note payable was amended and restructured into three separate notes. The terms of these related
party notes payable are detailed in the table below:

Description

Principal Amount

Interest Rate

Terms

2014 Note

$744.2 million

LIBOR + 3.0%

per annum

Annual amortization of $75.0 million payable in quarterly installments 2010 to 2014, remaining principal due on
February 17, 2014

2016 Note

$500.0 million

6.43% fixed

Interest due semi-annually, not subject to amortization, aggregate principal due on February 17,
2016

2019 Note

$500.0 million

6.91% fixed

Interest due semi-annually, not subject to amortization, aggregate principal due on February 17,
2019

The related party notes are senior unsecured obligations of MJN and rank equally in right of payment
with each other and with all existing and future senior indebtedness of MJN. In addition, the notes are structurally subordinated to all liabilities of the subsidiaries of MJN, including trade payables. The notes may be prepaid at any time, in whole
or in part, without premium or penalty. Each note is mandatorily repayable in cash upon a change of control, in an amount equal to 100% of the then outstanding principal amount plus accrued and unpaid interest. BMS will not be permitted to transfer
the notes to other persons, other than its affiliates. Based on the Companys assessment of current market conditions for debt of similar maturity, structure and risk, the estimated fair value of the related party debt was $1,850.6 million as
of September 30, 2009.

On January 31, 2009, Mead Johnson Nutricionales de Mexico, S. De R.L. de C.V., a subsidiary of MJN, entered
into an agreement with BMS to lease all of the property, plant and equipment assets at the manufacturing facility in Delicias, Mexico, for 20 years. This facility is included in the financial statements of the Company for all periods. The lease
qualifies as a capital lease, and MJN will continue to carry the property, plant and equipment in the Companys financial statements. The Company recorded a lease liability of $41.5 million, representing the present value of the minimum lease
payments set forth by the lease agreement. The liability is being amortized over the lease term.

During the three and nine months ended
September 30, 2009, related party interest expense was $24.3 million and $77.7 million, respectively, and cash interest paid was $42.9 million and $111.8 million, respectively. The Company had related party interest income of $0.6 million for
both the three and nine months ended September 30, 2009. Additionally, the Company recorded interest income from third parties of $0.7 million and $1.8 million during the three and nine months ended September 30, 2009, respectively.

With the exception of the net proceeds from the IPO, the impact of the separation activities and IPO, as
described above, on equity are captured in net transfers (to) from BMS on the consolidated statements of comprehensive income and equity (deficit). The components of net transfers (to) from BMS on the consolidated statements of
comprehensive income and equity (deficit) and the related cash flows for the nine months ended September 30, 2009, are as follows:

(Dollars in millions)

Statement of ComprehensiveIncome and Equity (Deficit) Changes in Equity

Statement of Cash Flows Financing Activities

Establishment of Foreign Notes/Repayment of Related Party Debt to BMS

$

(597.0

)

$

(597.0

)

Repayment of Related Party Foreign Notes Payable

(5.8

)

$

(602.8

)

Cash Contribution by BMS

286.0

$

286.0

Debt Reduction

250.0

Establishment/Settlement of Related Party Payable

(176.8

)

(176.8

)

Mexico Capital Lease Liability

(41.5

)

Other Activity

25.8

(11.5

)

Net Transfers (to) from BMS

$

(253.5

)

$

97.7

The Other Activity within Changes in Equity above of $25.8 million relates to various
separation and operating activities, including the assumption of certain net assets from BMS resulting from the acquisition of legal entities from BMS, excluding certain net assets that had previously been allocated to MJN in the historical
financial statements and the activity in January prior to the separation.

5. EARNINGS PER SHARE

The numerator for basic and diluted earnings per share is net earnings attributable to shareholders reduced by dividends and undistributed earnings
attributable to unvested shares. The denominator for basic earnings per share is the weighted average number of common stock outstanding during the period. The denominator for diluted earnings per share is the weighted average shares outstanding
adjusted for the effect of dilutive stock options, restricted stock units and performance share awards.

The following table presents the
calculation of basic and diluted earnings per share:

Three Months Ended September 30,

Nine Months Ended September 30,

(In millions, except per share data)

2009

2008

2009

2008

Basic Earnings per Share:

Weighted Average Common Shares Outstanding  Basic

204.5

170.0

199.3

170.0

Net Earnings Attributable to Shareholders

$

97.6

$

102.7

$

335.6

$

347.5

Dividends and undistributed earnings attributable to unvested shares

(0.2

)



(0.5

)



Net Earnings Attributable to Shareholders used for Basic Earnings per Common Share Calculation

Net Earnings Attributable to Shareholders used for Diluted Earnings per Common Share Calculation

$

97.4

$

102.7

$

335.1

$

347.5

Net Earnings Attributable to Shareholders per Common Share

$

0.48

$

0.61

$

1.68

$

2.05

Potential shares outstanding were 1.3 million as of September 30, 2009, of which
1.2 million and 1.3 million were not included in the diluted earnings per share calculation for the three and nine months ended September 30, 2009, respectively.

For the three and nine months ended September 30, 2009, the effective tax rate was 27.7% and 30.1%, respectively, compared with 30.6% and 35.5% for the same periods in 2008, as prepared in each case
on the conditions noted in Accounting Policies, Income Taxes. The lower rate was attributable primarily to benefits associated with restructuring the Companys foreign operations as part of the separation from BMS in the IPO process
and the earnings mix.

The Company operates under a new legal entity structure created to facilitate the IPO. As such, adjustments have been
made to the income tax accounts and equity (deficit) during the nine months ended September 30, 2009, to reflect the impact of this restructuring.

On February 10, 2009, the Company entered into a tax matters agreement with BMS. Under this agreement responsibility is allocated between BMS and its subsidiaries, on the one hand, and MJN, on the
other hand, for the payment of taxes resulting from filing (i) tax returns on a combined, consolidated or unitary basis and (ii) single entity tax returns for entities that have both MJN and non-MJN operations. Accordingly, BMS prepares
returns for MJN for all periods during which MJN is included in a combined, consolidated or unitary group with BMS or any of its subsidiaries for federal, state, local or foreign tax purposes, as if MJN itself were filing as a combined, consolidated
or unitary group. BMS also prepares returns for the Company for all periods during which a single-entity tax return is filed for an entity that has both MJN and non-MJN operations. MJN makes payments to BMS and BMS makes payments to the Company with
respect to such returns, as if such returns were actually required to be filed under the laws of the applicable taxing jurisdiction and BMS were the relevant taxing authority of such jurisdiction. If and when MJN ceases to be included in BMS
consolidated tax returns, BMS will compensate the Company for tax attributes for which MJN was not previously compensated and that BMS used, and MJN will reimburse BMS for tax attributes for which MJN was previously compensated but that BMS never
used. As of September 30, 2009, the Company holds a net payable of $28.7 million to BMS, which is recorded in related party payables-net, based upon the terms of the tax matters agreement discussed above.

As of September 30, 2009, the Companys reserve for unrecognized tax benefits were $1.1 million related to both domestic and international matters
that are not expected to reverse in the next 12 months. The Companys reserve for unrecognized tax benefits as of December 31, 2008 was $17.9 million. The Company believes that it has provided adequately for all uncertain tax positions
that are not otherwise indemnified by BMS. Pursuant to the tax matters agreement dated February 10, 2009, BMS maintains responsibility for all uncertain tax positions which may exist in the pre-IPO period or which may exist as a result of the
IPO transaction. MJN anticipates that it is reasonably possible that new issues may be raised by tax authorities and that these issues may require increases in the balance of unrecognized tax benefits.

7. INVENTORIES

The major
categories of inventories were as follows:

(Dollars in millions)

September 30, 2009

December 31, 2008

Finished Goods

$

172.6

$

191.3

Work in Process

23.1

28.0

Raw and Packaging Materials

122.6

135.0

Inventories

$

318.3

$

354.3

8. PROPERTY, PLANT, AND EQUIPMENT

The major categories of property, plant, and equipment were as follows:

On February 17, 2009, MJN entered into a three-year syndicated revolving credit facility agreement (Credit Facility). The Credit Facility is unsecured
and repayable on maturity at February 2012, subject to annual extensions if sufficient lenders agree. The maximum amount of outstanding borrowings and letters of credit permitted at any one time under the facility agreement is $410.0 million, which
amount may be increased from time to time up to $500.0 million at the Companys request and with the consent of the lenders, subject to customary conditions contained in the Credit Facility. The proceeds of the Credit Facility are to be used
for working capital and other general corporate purposes.

Borrowings under the Credit Facility will bear interest either at (a) LIBOR
for specified interest periods plus a margin determined with reference to the Companys consolidated leverage ratio, or (b) a floating rate based upon JPMorgan Chase Banks prime rate, the Federal Funds rate or LIBOR plus, in each
case, a margin determined with reference to the Companys consolidated leverage ratio. The margin on the borrowings can range from 1.125% to 2.65% over the applicable base.

The Companys subsidiaries may become borrowers under the Credit Facility.

The Credit
Facility contains customary covenants, including covenants applicable to limiting liens, substantial asset sales and mergers. Most of these restrictions are subject to certain minimum thresholds and exceptions. The Credit Facility also contains the
following financial covenants:

 The Company is required to maintain a ratio of
(a) consolidated total debt to (b) consolidated Earnings Before Interest, Income Taxes, Depreciation and Amortization (EBITDA) of not greater than 3.25 to 1.0. Compliance with this covenant is tested on the last day of each fiscal quarter
and as a condition precedent to each credit extension under the Credit Facility.

 The
Company is required to maintain a ratio of (a) consolidated EBITDA to (b) consolidated interest expense of at least 3.00 to 1.00. Compliance with this covenant is tested on the last day of each fiscal quarter for the preceding four
consecutive fiscal quarters.

In addition, the Credit Facility has customary events of default, including (subject to certain materiality
thresholds and grace periods) payment default, failure to comply with covenants, material inaccuracy of representation or warranty, bankruptcy or insolvency proceedings, change of control, ERISA matters and cross-default to other debt agreements.
The Company was in compliance with all debt covenants as of September 30, 2009.

There were no borrowings or letters of credit under the
revolving credit facility during the three and nine months ended September 30, 2009.

10. VARIABLE INTEREST ENTITY

The Companys business activities in China are conducted through MJN China, a subsidiary of BMS. BMS and MJN entered a service
agreement pursuant to which BMS agreed to cause MJN China to operate in a manner that is consistent with the instructions and directions of MJN. In return, MJN provides all necessary support and access to assets and resources, including intellectual
property, for BMS to cause MJN China to operate in a manner consistent with MJNs instructions and directions. The agreement was designed so that MJN is entitled to the cash flow, benefit and risk of MJN Chinas operations and business.
MJN China is consolidated in the Companys financial statements as MJN is the primary beneficiary.

The China operations are material to
MJN. As of September 30, 2009, total assets of MJN China included in the accompanying consolidated financial statements were $204.6 million and the associated liabilities were $87.8 million. There are no assets of MJN that serve as collateral
for MJN China and the creditors of MJN China have no recourse to the general credit of MJN.

11. NONCONTROLLING INTERESTS

Net earnings attributable to noncontrolling interests consists of an 11% interest in MJN China and a 10% interest in MJN Indonesia
held by third parties.

12. EMPLOYEE STOCK BENEFIT PLANS

MJN 2009 Stock Award and Incentive PlanIn December 2008, the MJN Board of Directors approved the MJN 2009 Stock Award and Incentive Plan (MJN 2009 Plan). The MJN 2009 Plan provides for the
grant of options to purchase MJN Class A common stock intended to qualify as incentive stock options, nonqualified stock options, non-statutory stock options, stock appreciation rights, restricted stock, stock units, stock granted as a bonus or
in lieu of another award, dividend equivalents, other stock-based awards and performance awards. Executive officers and other employees of MJN or one of its subsidiaries or affiliates, and non-employee directors and others who provide substantial
services to MJN, are eligible to be granted awards under the MJN 2009 Plan. Twenty-five million shares of Class A common stock were approved for grants to participants under the MJN 2009 Plan. Shares used for awards assumed in an acquisition or
combination will not count against the shares reserved under the MJN 2009 Plan. The shares reserved may be used for any type of award under the MJN 2009 Plan. Stock based compensation expense is based on awards ultimately expected to vest.
Forfeitures were estimated based on the historical experience of participants in the BMS plan.

Under the MJN 2009 Plan, executive officers and key employees of MJN may be granted options to purchase
common stock at no less than 100% of the market price on the date the option is granted. Options generally become exercisable in installments of 25% per year on each of the first through the fourth anniversaries of the grant date and have a
maximum term of 10 years. Generally, MJN will issue shares for the stock option exercises from treasury stock, if available, or will issue new shares.

The MJN 2009 Plan provides for the granting of restricted stock units to key employees, subject to restrictions as to continuous employment. Restrictions generally expire over a four or five year period from the date of grant. Compensation
expense is recognized over the restricted period. A stock unit is a right to receive stock at the end of the specified vesting period. A stock unit has no voting rights.

The MJN 2009 Plan also incorporates performance awards which are delivered in the form of a target number of performance shares and have a three-year performance cycle. For the 2009 to 2011 cycle, the
awards have annual goals set at the beginning of each year. For 2009, the goals are based 50% on earnings per share, 25% on sales and 25% on working capital and capital spending. Maximum performance will result in a maximum payout of 165% of the
award. If threshold targets are not met for the performance period, no payment will be made under the plan.

MJN Stock OptionsOn
March 11, 2009, MJN granted 1.0 million stock options under the MJN 2009 Plan. For stock options with a service condition, the grant date fair value was $4.87. For stock options with service and market conditions, the grant date fair value
was $7.30. In the second and third quarter of 2009, a nominal amount of stock options with a service condition was granted to eligible employees. As of September 30, 2009, there were 1.0 million stock options outstanding with a weighted
average grant date fair value of $6.13 and a total unrecognized compensation cost related to these stock options of $4.4 million that is expected to be recognized over a weighted average period of 2.56 years. Expense of $0.9 million and $1.7 million
was recognized for the three and nine months ended September 30, 2009, respectively. The fair value of employee stock options granted in 2009 was estimated on the date of grant using the Black-Scholes option pricing model for stock options with
a service condition, and the Monte Carlo simulation model for options with service and market conditions, with the following assumptions:

Black-ScholesModel

Monte CarloModel

Expected volatility

23.76%

28.66%

Risk-free interest rate

2.32%

2.95%

Dividend yield

2.89%

2.89%

Expected life

6.25 years

6.79 years

The expected volatility assumption required in the Black-Scholes model and Monte Carlo model was
calculated based on peer group analysis of stock price volatility with a 6.25-year and 10-year look back period ending on the grant date, respectively. The selection of this approach was based on MJNs assessment that this calculation of
expected volatility is more representative of future stock price trends than using historical MJN volatility given the short time period that the Companys stock has been traded. The risk-free interest rate assumption in the Black-Scholes model
is based upon the U.S. Treasury yield curve in effect at the time of grant. The risk-free interest rate assumption in the Monte Carlo model is based upon the 10-year U.S. Treasury yield curve. The dividend yield assumption is based on MJNs
expectation of dividend payouts. The expected life of employee stock options represents the weighted average period the stock options are expected to remain outstanding and is a derived output based on the vesting period and the contractual term for
each grant, or for each vesting tranche for awards with graded vesting. The selection of this approach was based on MJNs assessment that this simplified method is appropriate given the terms of the stock option plans and given that there is
not sufficient historical share option exercise experience upon which to estimate expected terms.

MJN 2009 Restricted Stock
UnitsIn the first quarter of 2009, MJN granted 0.3 million restricted stock units to approximately 120 employees, including each of the Companys Named Executive Officers and outside directors. The awards had a grant date fair
value of $24.00 per share, which was determined based on the IPO price. These restricted stock units will vest in equal installments on each of the third, fourth and fifth anniversaries of the date of grant. In the second and third quarter of 2009,
a nominal amount of restricted stock units was granted to eligible employees. As of September 30, 2009, there were 0.3 million unvested restricted stock units with a weighted average grant date fair value of $24.15 and total unrecognized
compensation cost related to these awards of $7.1 million that is expected to be recognized over a weighted average period of 4.33 years. Expense of $0.4 million and $0.9 million was recognized for the three and nine months ended September 30,
2009, respectively.

MJN Performance Share AwardsOn March 11, 2009, MJN granted 0.1 million performance share awards to
certain employees. The awards had a weighted average grant date fair value of $26.58 per award. As of September 30, 2009, there were 0.1 million awards outstanding with a weighted average fair value of $26.58 and a total unrecognized
compensation cost related to these awards of $3.4 million that is expected to be recognized over a weighted average period of 2.25 years. Expense of $0.5 million and $1.1 million was recognized for the three and nine months ended September 30,
2009, respectively. The value of nonvested performance awards was based on the closing trading price of MJNs stock on the date of the grant.

BMS Employee Stock Benefit PlansPrior to the separation from BMS, certain MJN employees were granted options to purchase BMSs stock under the BMS plans. These plans also incorporate restricted stock and long-term
performance awards. As of

September 30, 2009, total unrecognized compensation costs related to unvested stock options, restricted stock units and performance awards under the BMS plans was $11.6 million and the
weighted average period over which such awards are expected to be recognized was 2.13 years. Expense of $2.3 million was recognized for both the three months ended September 30, 2009 and 2008, and $6.6 million and $6.8 million was recognized
for the nine months ended September 30, 2009 and 2008, respectively, which resulted in an increase to total equity (deficit).

Pension and Other Postretirement BenefitsPrior to the separation from BMS, employees who met certain eligibility requirements participated in
various defined benefit pension plans administered and sponsored by BMS. As part of the separation, the BMS defined benefit pension plan assets and liabilities for active U.S. MJN employees were transferred to a U.S. MJN defined benefit pension
plan. The related assets and liabilities primarily held in the BMS defined benefit pension plan for the transferring participants were allocated based on assumptions set forth in an employee matters agreement with BMS. Outside of the United States,
BMS transferred to MJN defined benefit plans pension assets and liabilities allocable to the employees transferring to MJN in certain countries as described in the employee matters agreement. MJN assumed liabilities allocable to employees
transferring to the Company under certain pension, supplemental retirement and termination indemnity plans. For the purpose of the MJN defined benefit pension plans, the measurement date was the separation date.

Pension plan benefits are based primarily on the participants years of credited service and compensation. Concurrent with the establishment of the
U.S. MJN defined benefit pension plan, benefits under the plan were frozen to limit service used in the calculation of benefits to service accrued under the BMS defined benefit pension plan.

The net periodic benefit cost of the Companys defined benefit pension and postretirement benefit plans included the following components:

Three Months Ended September 30, 2009

Separation Date through September 30, 2009

(Dollars in millions)

PensionBenefits

OtherBenefits

PensionBenefits

OtherBenefits

Service cost  benefits earned during the period

$

1.3

$

0.2

$

1.8

$

0.5

Interest cost on projected benefit obligation

4.8

0.2

12.3

0.7

Expected return on plan assets

(3.5

)



(11.4

)



Amortization of prior service cost (benefit)



(0.1

)



(0.1

)

Amortization of net actuarial loss

(3.0

)

0.1

1.0

0.6

Amortization of transition cost









Net periodic benefit cost

$

(0.4

)

$

0.4

$

3.7

$

1.7

Curtailments and settlements





0.1



Total net periodic benefit cost

$

(0.4

)

$

0.4

$

3.8

$

1.7

In the first quarter of 2009, MJN recognized an estimated net obligation of $97.1 million and an
unrealized loss of $156.0 million ($96.8 million net of tax). As of September 30, 2009, the estimated net obligation was $95.4 million and the unrecognized loss was $152.2 million ($97.5 million net of tax). During the third quarter of 2009, MJN
recognized an additional net obligation of $18.4 million, reflecting a reduction of assets allocated in the spinoff from BMS defined benefit pension plans in the United States. The reduced asset allocation from BMS resulted from updated actuarial
valuations and rules governing pension spinoffs as regulated by the Internal Revenue Code. Offsetting this change was the impact of a $25.5 million contribution by MJN into the Companys U.S. pension plan trust.

The principal pension plan of the Company is the Mead Johnson & Company Retirement Plan in the
United States which represents approximately 80% of the Companys total pension and postretirement plans assets and obligations. During the third quarter, MJN received revised actuarial valuations as of the separation date for all of the
Companys domestic pension and postretirement plans. The actuarial assumptions and MJNs funding policy for these plans are as follows:

Actuarial assumptions for the domestic plans

Assumptions used to determine the domestic plans benefit obligations at the
separation date and the net periodic benefit cost from the separation date through September 30, 2009, were as follows:

Pension Benefits

Other Benefits

Discount rate

7.00%

7.25%

Rate of compensation increase

3.56%

3.56%

Plan assets

During the first nine months of 2009, BMS transferred cash of $68.5 million into the MJN U.S. pension plan trust and it is anticipated that $69.5 million plus an amount for actual gains and losses on plan
assets between January 1, 2009, and the date of transfer will be transferred in the fourth quarter of 2009.

The Companys investment
strategy for the plan assets consists of a mix of equities and fixed income in order to achieve returns over a market cycle which reduce contribution and expense at an acceptable level of risk. For the U.S. pension plans, a target asset allocation
of 60% public equity (40% U.S., 20% international), and 40% fixed income is maintained and cash flow (i.e., cash contributions, benefit payments) is used to rebalance back to the targets as necessary. Investments are well diversified within each of
the three major asset categories. Approximately 70% of the U.S. equity investments are actively managed. Investment strategies for international pension plans are typically similar, although the asset allocations are usually more conservative.

Contributions

The funding
policy for the pension plans is to contribute amounts to provide for current service and to fund past service liability. For the nine months ended September 30, 2009, contributions to pension plans were $26.3 million, the majority of which were
to the U.S. pension plan. Although no additional minimum contributions will be required, the Company may choose to make further cash contributions to the pension plans in 2009. Contributions to other postretirement benefits are adjusted periodically
and vary by date of retirement and country. The medical plan is contributory and the life insurance plan is noncontributory. There will be no cash funding for other postretirement benefits in 2009.

Estimated Future Benefit Payments

The
following benefit payments for the domestic pension plans and of other benefits, which reflect expected future service, as appropriate, are expected to be paid:

(Dollars in millions)

PensionBenefits

OtherBenefits

Remaining 2009

$

2.6

$



2010

13.4

0.4

2011

14.0

0.7

2012

16.6

0.9

2013

18.0

1.2

Years 2014 - 2018

101.7

9.1

Prior to the separation from BMS, the pension and postretirement plans for MJN were accounted for
under a multi-employer plan. MJN specifically identified the pension expense attributable to MJN participants for the pension plans in the Philippines, Indonesia and the Netherlands. For the pension plans in the United States, Canada, Taiwan and
Mexico, costs associated with the pension plans were allocated to MJN on the basis of pensionable wages.

Defined Contribution
BenefitsPrior to the separation from BMS, employees who met certain eligibility requirements participated in various defined contribution plans administered and sponsored by BMS. As part of the separation, the U.S. BMS qualified defined
contribution plan transferred to a U.S. MJN qualified defined contribution plan, with assets and liabilities allocable to the participants transferring to the U.S. MJN qualified defined contribution plan. Outside of the United States, BMS
transferred to MJNs defined contribution plans assets allocable to the employees transferring to the Company in certain countries as described in the employee matters agreement. MJN also assumed supplemental benefit plan liabilities allocable
to employees transferring to the Company as set forth in the employee matters agreement. The Company provides a base contribution in addition to a Company match of certain employee contributions.

14. SEGMENT INFORMATION

MJN operates in four geographic operating segments: North America, Latin America, Asia and Europe. This operating segmentation is how the chief operating decision maker regularly assesses information for decision making purposes, including
allocation of resources. Due to similarities in the economics, products offered, production process, customer base, and regulatory environment, these operating segments have been aggregated into two reportable segments: Asia/Latin America and
North America/Europe.

Corporate and Other consists of unallocated general and administrative activities and associated
expenses, including in part, executive, legal, finance, information technology, human resources, research and development, global marketing costs, global supply chain and certain facility costs.

On January 1, 2009, the Company began classifying the operations of a plant from Corporate and Other to Asia/Latin America to coincide
with the final destination of the majority of the product manufactured at this plant. This change did not have a material effect on the net sales or earnings before interest and income taxes for the segments. Assets at January 1, 2009 of $74.6
million have been reclassified from Corporate and Other to the Asia/Latin America segment.

Three Months Ended September 30,

Nine Months Ended September 30,

Net Sales

Earnings Before Interestand Income Taxes

Net Sales

Earnings Before Interest andIncome Taxes

(Dollars in millions)

2009

2008

2009

2008

2009

2008

2009

2008

Asia/Latin America

$

413.8

$

400.1

$

143.7

$

108.2

$

1,200.1

$

1,138.7

$

438.5

$

359.4

North America/Europe

286.0

342.7

90.3

115.6

912.0

1,036.0

310.5

357.6

Total Reportable Segments

699.8

742.8

234.0

223.8

2,112.1

2,174.7

749.0

717.0

Corporate and Other





(74.3

)

(60.1

)





(182.4

)

(156.2

)

Total

$

699.8

$

742.8

$

159.7

$

163.7

$

2,112.1

$

2,174.7

$

566.6

$

560.8

15. FINANCIAL ASSETS AND LIABILITIES

The Company is exposed to market risk due to changes in commodities pricing (including dairy and natural gas), currency exchange rates and interest rates.
To manage that risk, the Company enters into certain derivative financial instruments, when available on a cost-effective basis, to hedge its underlying economic exposure. MJNs financial assets and liabilities are measured using inputs based
on quoted market prices for similar assets and liabilities in active markets, i.e. level two of the fair value hierarchy. Derivative financial instruments are not used for speculative purposes. The Company hedges natural gas prices when it is cost
effective to do so, but historically has not hedged dairy prices. The Company does not hedge the interest rate risk associated with money market funds, which are measured from level two of the fair value hierarchy and totaled $218.4 million as of
September 30, 2009.

Cash Flow Hedges

Foreign Exchange contractsThe Company utilizes foreign currency contracts to hedge forecasted transactions, primarily intercompany and related party transactions, on certain foreign
currencies and designates these derivative instruments as foreign currency cash flow hedges when appropriate. The notional and fair value amount of the Companys foreign exchange derivative contracts at September 30, 2009, were $73.8
million and $2.3 million net liabilities, respectively. For these derivatives, in which the majority qualify as hedges of probable forecasted cash flows, the effective portion of changes in fair value is temporarily reported in accumulated other
comprehensive income (loss) and recognized in earnings when the hedged item is settled or deemed ineffective.

The table below summarizes
the Companys outstanding foreign exchange forward contracts at September 30, 2009. The fair value of all foreign exchange forward contracts is based on quarter end forward currency rates. The fair value of foreign exchange forward
contracts should be viewed in relation to the fair value of the underlying hedged transactions and the overall reduction in exposure to fluctuations in foreign currency exchange rates.

(Dollars in millions)

Weighted AverageForward Rate

Notional Amount

Fair Value Asset(Liability)

Maturity

Foreign Exchange Forwards:

Cash Flow Hedges:

Canadian Dollar

1.14

$

45.5

$

(2.5

)

2009/2011

Mexican Peso

13.74

28.3

0.2

2009/2010

Total Foreign Exchange Forwards

$

73.8

$

(2.3

)

At September 30, 2009, the balance of deferred losses on foreign exchange forward contracts that
qualified for cash flow hedge accounting included in accumulated other comprehensive income (loss) on a pre-tax basis was $2.3 million ($1.3 million net of tax), all of which is expected to be reclassified into earnings within the next 17
months.

The Company assesses effectiveness at the inception of the hedge and on a quarterly basis. These assessments
determine whether derivatives designated as qualifying hedges continue to be highly effective in offsetting changes in the cash flows of hedged items. Any ineffective portion of the change in fair value is not deferred in accumulated other
comprehensive income (loss) and is included in current period earnings. For the three and nine months ended September 30, 2009, the impact of hedge ineffectiveness on earnings was not significant.

The Company will discontinue cash flow hedge accounting when the forecasted transaction is no longer probable of occurring on the originally forecasted
date, or 60 days thereafter, or when the hedge is no longer effective.

Natural Gas contractsThe Company utilizes forward
contracts to hedge forecasted purchases of natural gas, and designates these derivative instruments as cash flow hedges when appropriate. Natural gas forward contracts are valued using quoted NYMEX futures prices for natural gas at the reporting
date. For these derivatives, in which the majority qualify as hedges of future forecasted cash flows, the effective portion of changes in fair value is temporarily reported in accumulated other comprehensive income (loss) and recognized in
earnings when the hedged item affects earnings. The notional and fair value amounts of natural gas contracts at September 30, 2009, were 0.2 decatherms and $0.7 million liability, respectively. At September 30, 2009, the balance of
deferred losses on natural gas contracts that qualified for cash flow hedge accounting included in accumulated other comprehensive income (loss) on a pre-tax basis was $0.7 million ($0.5 million net of tax), all of which is expected to be
reclassified into earnings within the next 3 months. For the three and nine months ended September 30, 2009, there was no earnings impact from discontinued natural gas hedges.

The following table summarizes the Companys fair value of outstanding derivatives:

(Dollars in millions)

Balance Sheet Location

September 30,2009

December 31,2008

Derivatives designated as hedging instruments:

Foreign Exchange Contracts

Other Assets

$

0.8

$

10.1

Foreign Exchange Contracts

Accrued Expenses

(3.1

)

(0.3

)

Natural Gas Contracts

Accrued Expenses

(0.7

)

(2.1

)

Total Derivatives designated as hedging instruments

$

(3.0

)

$

7.7

The change in accumulated other comprehensive income (loss) and the impact on earnings from
foreign exchange and natural gas forwards, and that qualified as cash flow hedges for the nine months ended September 30, 2009 and 2008, was as follows:

Foreign ExchangeContracts

Natural Gas Contracts

Total Cash FlowHedges

(Dollars in millions)

2009

2008

2009

2008

2009

2008

Balance at January 1:

$

6.6

$



$

(1.4

)

$



$

5.2

$



Derivatives qualifying as cash flow hedges deferred in other comprehensive income

The Companys derivative financial instruments present certain market and counterparty risks;
however, concentration of counterparty risk is mitigated as the Company deals with a variety of major banks worldwide with Standard & Poors and Moodys long term debt ratings of A or higher. In addition, only conventional
derivative financial instruments are utilized. The Company would not be materially impacted if any of the counterparties to the derivative financial instruments outstanding at September 30, 2009, failed to perform according to the terms of its
agreement. At this time, the Company does not require collateral or any other form of securitization to be furnished by the counterparties to its derivative financial instruments.

16. LEGAL PROCEEDINGS AND CONTINGENCIES

In the ordinary course of business, MJN is subject to lawsuits, investigations, government inquiries and claims, including, but not limited to, product liability claims, advertising disputes and
inquiries, other commercial disputes, premises claims and employment and environmental, health, and safety matters. MJN records accruals for such contingencies when it is probable that a liability will be incurred and the loss can be reasonably
estimated. Significant litigation matters are described below.

On April 27, 2009, PBM Products, LLC (PBM), a distributor of store brand infant formulas and
nutritionals, filed a complaint against Mead Johnson & Company, a subsidiary of Mead Johnson Nutrition Company, in the U.S. District Court (Eastern District of Virginia), alleging, among other things, false and misleading advertising with
respect to certain Enfamil LIPIL infant formula advertising. PBM sought a temporary restraining order which was denied by the court. PBM seeks equitable relief and unspecified monetary damages. MJN denies all liability under any of PBMs claims
and has filed a counterclaim against PBM for false and misleading advertising with respect to certain PBM product advertising. MJN seeks equitable relief and unspecified monetary damages. Trial is scheduled to begin in early November 2009. MJN
believes that PBMs claims lack merit and is vigorously defending the lawsuit.

Three purported consumer class action suits seeking to
take advantage of the PBM matter described above have also been filed and served on the Company. The suits are Michelle Weeks v. Mead Johnson Nutrition Company and Mead Johnson & Company, filed in the U.S. District Court (Central
District of California) on August 18, 2009, Gina Martin v. Mead Johnson Nutrition Company and Mead Johnson & Company, filed in the U.S. District Court (District of Massachusetts) on September 25, 2009, and Allison Nelson
et. al v. Mead Johnson Nutrition Company et. al, filed in the U.S. District Court (Southern District of Florida) on October 13, 2009. Each of these cases cite the PBM complaint as support for allegations that certain false and misleading
advertising of Enfamil LIPIL infant formula has resulted in financial injury to consumers. We deny all allegations and will defend these cases.

At this time, the Company has no estimate of its potential loss in the event of an unfavorable outcome in the PBM matter or purported class actions described above, nor can MJN predict what, if any, effect the litigation may have on the
Companys current advertising.

Although MJN cannot predict with certainty the ultimate resolution of these or other lawsuits,
investigations and claims asserted against the Company, MJN does not believe any currently pending legal proceeding to which MJN is a party will have a material adverse effect on the Companys business or financial condition, although an
unfavorable outcome with respect to one or more of these proceedings could have a material adverse effect on the Companys results of operations for the periods in which a loss is recognized.

17. OTHER (INCOME)/EXPENSESNET

Included in other (income)/expensesnet for the three months ended September 30, 2009, was $3.2 million in severance costs. Included in other (income/expensesnet for the nine
months ended September 30, 2009, was an $11.9 million gain on sale of a non-strategic intangible asset, and $10.0 million of income for a patent settlement, offset by $10.1 million in severance costs.

ITEM 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations

Overview of Our Business

We are a global leader in pediatric nutrition. We are committed to creating trusted nutritional brands and products that help improve the health and development of infants and children around the world
and provide them with the best start in life. Our comprehensive product portfolio addresses a broad range of nutritional needs for infants, children and expectant and nursing mothers. We have over 100 years of innovation experience during which we
have developed or improved many breakthrough or industry-defining products across each of our product categories. We operate in four geographic regions: Asia, Latin America, North America and Europe. Due to similarities in the economics, products
offered, production process, customer base and regulatory environment, these operating regions have been aggregated into two reportable segments: Asia/Latin America and North America/Europe.

Financial Highlights

For the nine months
ended September 30, 2009, net sales totaled $2,112.1 million, down 3% including an unfavorable foreign exchange impact of 6%, compared to $2,174.7 million from the same period in 2008. In our Asia/Latin America segment sales grew by 14%,
excluding the adverse impact of foreign exchange, driven by market growth and market share gains in key markets due to our investments in product innovation and promotion. Sales decreased in our North America/Europe segment by 9%, excluding foreign
exchange, due to market share losses and a market decline due to a decrease in births in the United States.

Earnings before interest and
income taxes (EBIT) increased to $566.6 million, up from $560.8 million a year earlier. Factors affecting EBIT in the first nine months of 2009 include the benefit of lower commodity costs and the carryover benefit of pricing actions taken in 2008,
along with price increases in 2009 in a select number of international markets. These benefits were somewhat offset by higher costs incurred as a stand-alone public company and the impact of a stronger dollar. Results for 2009 include costs
associated with the initial public offering (IPO) and separation from Bristol-Myers Squibb Company (BMS) of $31.3 million.

Net earnings
attributable to shareholders for the first nine months of 2009 totaled $335.6 million, compared with $347.5 million, for the same period a year ago. Net interest expense for the nine months ended September 30, 2009, totaled $75.3 million
compared with $11.9 million for the same period in 2008. Results for 2009 benefited from a lower effective tax rate (ETR) compared with 2008 largely due to benefits associated with the restructuring of our foreign operations as part of the
separation from BMS. The ETR for the nine months ended September 30, 2009, was 30.1% versus 35.5% for 2008. Earnings per diluted share for the nine months ended September 30, 2009, were $1.68, compared with $2.05 in 2008. There were
199.3 million diluted shares outstanding during the first nine months of 2009, versus 170.0 million shares in 2008.

Factors
Affecting Comparability

The results for the three and nine months ended September 30, 2009 include several items related to the IPO
and our separation from BMS that affect the comparability of the companys financial results between 2009 and 2008. These items include specified IPO-related costs, interest expense, operating model changes, the ETR and the number of shares
outstanding.

We incurred $7.2 million and $31.3 million in costs in connection with our IPO and separation during the three and nine months
ended September 30, 2009, respectively, compared to $13.8 million and $14.0 million during the three and nine months ended September 30, 2008, respectively. These costs relate to legal, accounting, systems separation and consulting
services.

On August 26, 2008, we issued a $2.0 billion intercompany note to BMS. The note was restructured at the IPO date reducing the
related party debt to approximately $1.8 billion. Net interest expense during the three and nine months ended September 30, 2009, was $23.0 million and $75.3 million, respectively, compared with $11.9 million for both the three and nine months
ended September 30, 2008.

Our 2009 results include operating model changes in Brazil, Europe and Mexico. In Brazil, our ability to
operate as a new stand-alone subsidiary was delayed until late in the third quarter. Prior to that time, BMS distributed and recorded sales for our products and we conducted marketing activities. In Europe, we have transitioned to a third-party
distributor model with BMS serving as our distributor. This reduced net sales by the amount of the distributors margin and lowered costs for the distribution-related expenses. In Mexico, we now operate our business through a newly formed
operating subsidiary that is incurring higher profit sharing costs than were allocated to us when we operated within BMS. The combined effect of these operating model changes was to reduce net sales growth for the three months ended
September 30, 2009, by $7.7 million and EBIT by $0.3 million. The combined effect of these operating model changes was to reduce net sales and EBIT growth for the nine months ended September 30, 2009, by $25.3 million and $1.7 million,
respectively.

For the three and nine months ended September 30, 2009, the ETR was 27.7% and 30.1%, respectively, compared to 30.6% and
35.5% for the three and nine months ended September 30, 2008, respectively. The lower rates were attributable primarily to benefits associated with restructuring the Companys foreign operations as part of the separation from BMS in the
IPO process and the earnings mix.

Prior to February 10, 2009, there were 170.0 million shares of common stock outstanding. The
company issued an additional 34.5 million shares of common stock in the IPO. As of September 30, 2009, we had 204.6 million diluted common shares.

In addition to these items that affect the 2009 results of operations, there are several adjustments to the balance sheet related to our separation from BMS. These include the recognition of pension and
capital lease liabilities, inclusion of cash balances and restructuring of related-party debt and divisional equity. See Item 1. Financial Statements.

Three Months Results of Operations

Below is a summary of comparative results of
operations and a more detailed discussion of results for the three months ended September 30, 2009 and 2008:

Three Months Ended September 30,

% of Net Sales

(In millions, except per share data)

2009

2008

% Change

2009

2008

Net Sales

$

699.8

$

742.8

(6%

)





Earnings Before Interest and Income Taxes

159.7

163.7

(2%

)

23%

22%

Interest Expensenet

(23.0

)

(11.9

)



3%

2%

Earnings before Income Taxes

136.7

151.8

(10%

)

20%

20%

Provision for Income Taxes

(37.9

)

(46.5

)

(18%

)

5%

6%

Effective Tax Rate

27.7

%

30.6

%

Net Earnings

98.8

105.3

(6%

)

14%

14%

Less: Net Earnings Attributable to Noncontrolling Interests

(1.2

)

(2.6

)



0%

0%

Net Earnings Attributable to Shareholders

97.6

102.7

(5%

)

14%

14%

Weighted Average Common Shares Outstanding  Diluted

204.6

170.0

Earnings per Common Share  Diluted

$

0.48

$

0.61

Net Sales

Our net sales by reportable segments are shown in the table below:

Three Months Ended September 30,

% Change Due to

(Dollars in millions)

2009

2008

% Change

Volume

Price

Foreign Exchange

Asia/Latin America

$

413.8

$

400.1

3%

2%

8%

(7%

)

North America/Europe

286.0

342.7

(17%

)

(16%

)

1%

(2%

)

Net Sales

$

699.8

$

742.8

(6%

)

(7%

)

5%

(4%

)

Our Asia/Latin America segment represented 59% of net sales for the three months ended
September 30, 2009, compared to 54% for the three months ended September 30, 2008. We continue to achieve significant sales growth in our international markets, particularly in Asia, where sales grew by double digits, excluding the impact
of foreign exchange. Our success in the Asia/Latin America segment comes from market growth as well as our investment in product innovation, sales force, advertising and product promotion. China, which is our second largest market, continues to grow
at rates more than double those for the Asia/Latin America segment as a whole. Multiple other Asian and Latin American countries achieved double-digit growth as well, excluding the impact of foreign exchange.

The decrease in North America/Europe segment sales was primarily due to weaker performance in the United States driven by share losses, U.S. retail
inventory reductions and the contraction in the U.S. market from lower births. The reduction in inventories held by retailers in the United States during the three months ended September 30, 2009, followed a corresponding build by retailers in
the three months ended June 30, 2009, due to the launch of Enfamil PREMIUM LIPIL in April 2009. Excluding the impact of foreign exchange, Europe sales declined due in large part to a reduction of distributor inventory levels.

We recognize revenue net of various sales adjustments to arrive at net sales as reported on the statements of earnings. These adjustments are referred to as
gross-to-net sales adjustments. The reconciliation of our gross sales to net sales was as follows:

Three Months Ended September 30,

(Dollars in millions)

2009

2008

% Change

Gross Sales

$

964.3

$

1,021.7

(6%)

Gross-to-Net Sales Adjustments

WIC Rebates

(187.3

)

(201.7

)

(7%)

Sales Discounts

(26.8

)

(22.4

)

20%

Returns

(17.4

)

(19.4

)

(10%)

Cash Discounts

(11.2

)

(12.4

)

(10%)

Prime Vendor Charge-Backs

(9.3

)

(10.5

)

(11%)

Coupons and Other Adjustments

(12.5

)

(12.5

)

0%

Total Gross-to-Net Sales Adjustments

(264.5

)

(278.9

)

(5%)

Total Net Sales

$

699.8

$

742.8

(6%)

Adjustments as a percentage of gross sales were flat year-over-year. The decline in Women, Infants
and Children (WIC) rebates was due to a decline in U.S. births and the reduction of infant formula vouchers provided by government agencies in select states. The change in sales discounts was due to new product launches along with a mix shift in
sales to Asia/Latin America where sales discounts are typically higher than in North America/Europe.

Gross Profit

Three Months Ended September 30,

(Dollars in millions)

2009

2008

% Change

Net Sales

$

699.8

$

742.8

(6%)

Cost of Products Sold

244.6

287.9

(15%)

Gross Profit

$

455.2

$

454.9

0%

Gross Margin

65.0

%

61.2

%

Improvements in gross margin were driven by reduced commodity costs and product pricing partially
offset by the negative impact of foreign exchange and higher manufacturing costs from capacity increases.

The decrease in marketing, selling and administrative expenses was primarily due to the positive impact of foreign exchange, lower distribution costs and
sales force productivity initiatives. Costs related to our IPO and other separation costs decreased compared to the prior year, however, this decrease was offset by higher litigation costs.

Advertising and Product Promotion Expenses

Our advertising and product promotion expenses are influenced by the timing of key product launches and promotions. The increase reflected the continued investment in Asia and Latin America.

Research and Development Expenses

Research
and development expenses remained stable year-over-year.

Other (Income)/Expensesnet

Other (income)/expensesnet for the three months ended September 30, 2009, increased by $6.2 million due primarily to foreign exchange
losses on assets held in non-functional currencies.

Earnings Before Interest and Income Taxes

EBIT from our two reportable segments, Asia/Latin America and North America/Europe, is reduced by corporate and other costs. Corporate and other costs
consist of unallocated general and administrative activities and associated expenses, including in part, executive, legal, finance, information technology, human resources, research and development, global marketing and global supply chain costs.

Three Months Ended September 30,

(Dollars in millions)

2009

2008

% Change

Asia/Latin America

$

143.7

$

108.2

33%

North America/Europe

90.3

115.6

(22%

)

Corporate and Other

(74.3

)

(60.1

)

24%

Total Earnings Before Interest and Income Taxes

$

159.7

$

163.7

(2%

)

The increase in EBIT for Asia/Latin America was driven by higher net sales in addition to an improved
gross margin, resulting from favorable commodity costs and increased pricing, largely from late 2008 price increases.

The decrease in EBIT
for the North America/Europe segment was largely due to the sales decline, partly offset by sales force productivity initiatives.

Expenses
for the Corporate and Other segment increased $14.2 million driven primarily by higher litigation costs and severance activities that occurred during the third quarter of 2009.

Interest Expensenet

Interest expensenet for the third quarter of 2009
primarily represents interest incurred on the $744.2 million 2014 Note, the $500.0 million 2016 Note and the $500.0 million 2019 Note. Interest expensenet for the third quarter of 2008 represented interest incurred on the $2.0 billion
intercompany note payable issued in August 2008.

The ETR for the three months ended September 30, 2009, decreased to 27.7% from 30.6% for the three months ended September 30, 2008. The lower rate was primarily attributable to benefits
associated with the restructuring of our foreign operations as part of the separation from BMS in the IPO process and the earnings mix.

Net Earnings Attributable to Noncontrolling Interests

Net earnings attributable to noncontrolling interests consisted
of an 11% interest in MJN China and a 10% interest in MJN Indonesia held by third parties.

Net Earnings Attributable to Shareholders

For the three months ended September 30, 2009, net earnings attributable to shareholders decreased by $5.1 million to $97.6
million compared with the three months ended September 30, 2008. The decrease was primarily due to higher interest expense and the unfavorable impact of foreign exchange, partially offset by a reduction in the ETR.

Nine Months Results of Operations

Below
is a summary of comparative results of operations and a more detailed discussion of results for the nine months ended September 30, 2009 and 2008:

Nine Months Ended September 30,

% of Net Sales

(In millions, except per share data)

2009

2008

% Change

2009

2008

Net Sales

$

2,112.1

$

2,174.7

(3%

)





Earnings Before Interest and Income Taxes

566.6

560.8

1%

27%

26%

Interest Expensenet

(75.3

)

(11.9

)



4%

1%

Earnings before Income Taxes

491.3

548.9

(10%

)

23%

25%

Provision for Income Taxes

(147.9

)

(195.1

)

(24%

)

7%

9%

Effective Tax Rate

30.1

%

35.5

%

Net Earnings

343.4

353.8

(3%

)

16%

16%

Less: Net Earnings Attributable to Noncontrolling Interests

(7.8

)

(6.3

)



0%

0%

Net Earnings Attributable to Shareholders

335.6

347.5

(3%

)

16%

16%

Weighted Average Common Shares Outstanding  Diluted

199.3

170.0

Earnings per Common Share  Diluted

$

1.68

$

2.05

Net Sales

Our net sales by reportable segments are shown in the table below:

Nine Months Ended September 30,

% Change Due to

(Dollars in millions)

2009

2008

% Change

Volume

Price

Foreign Exchange

Asia/Latin America

$

1,200.1

$

1,138.7

5%

3%

11%

(9%)

North America/Europe

912.0

1,036.0

(12%)

(9%)

0%

(3%)

Net Sales

$

2,112.1

$

2,174.7

(3%)

(3%)

6%

(6%)

Our Asia/Latin America segment represented 57% of net sales for the nine months ended
September 30, 2009, compared to 52% for the nine months ended September 30, 2008. We continue to have significant sales growth in our international markets, particularly in Asia where sales increased by double digits, excluding the impact
of foreign exchange. Our success in the Asia/Latin America segment comes from market growth as well as our investments in product innovation, sales force, advertising and product promotion. Sales growth in China, our second largest market, was the
highest of any market in which we operate on a year-to-date basis, although

multiple other Asian and Latin American countries increased sales by double digits, excluding the impact of foreign exchange. Volume growth of 3% in the segment was adversely impacted by
approximately two percentage points due to the operating model change in Brazil.

The decrease in North America/Europe sales was primarily due
to weaker performance in the United States driven by share losses and the contraction in the U.S. market from lower births.

Our net sales by
product category are shown in the table below:

Nine Months Ended September 30,

(Dollars in millions)

2009

2008

% Change

Infant Formula

$

1,376.3

$

1,462.2

(6%)

Childrens Nutrition

667.5

640.7

4%

Other

68.3

71.8

(5%)

Net Sales

$

2,112.1

$

2,174.7

(3%)

Excluding foreign exchange, infant formula decreased 2% reflecting the decreases in the North
America/Europe segment, which are predominantly infant formula markets. Excluding foreign exchange, childrens nutrition increased 14%, reflecting the strength of the business in Asia and Latin America.

The reconciliation of our gross sales to net sales was as follows:

Nine Months Ended September 30,

(Dollars in millions)

2009

2008

% Change

Gross Sales

$

2,905.2

$

2,997.8

(3%)

Gross-to-Net Sales Adjustments

WIC Rebates

(569.0

)

(601.7

)

(5%)

Sales Discounts

(76.0

)

(63.9

)

19%

Returns

(54.2

)

(48.7

)

11%

Cash Discounts

(33.4

)

(35.4

)

(6%)

Prime Vendor Charge-Backs

(29.3

)

(32.1

)

(9%)

Coupons and Other Adjustments

(31.2

)

(41.3

)

(24%)

Total Gross-to-Net Sales Adjustments

(793.1

)

(823.1

)

(4%)

Total Net Sales

$

2,112.1

$

2,174.7

(3%)

Adjustments as a percentage of gross sales remained flat year-over-year. The decline in WIC rebates
was due to a decline in U.S. births and the reduction of infant formula vouchers provided by government agencies in select states. The change in sales discounts and coupons was due to promotional mix and new product launches along with a mix shift
in sales to Asia/Latin America where sales discounts are typically higher than in North America/Europe. The increase in returns was due to an abnormally low amount of returns during the nine months ended September 30, 2008.

Gross Profit

Nine Months Ended September 30,

(Dollars in millions)

2009

2008

% Change

Net Sales

$

2,112.1

$

2,174.7

(3%)

Cost of Products Sold

728.3

812.0

(10%)

Gross Profit

$

1,383.8

$

1,362.7

2%

Gross Margin

65.5

%

62.7

%

Improvements in gross margin were driven by reduced commodity costs and product pricing partially
offset by the negative impact of foreign exchange and higher manufacturing costs from capacity increases.

The majority of the increase in marketing, selling and administrative expenses was due to $22.3 million in additional corporate expenses that we now carry as
a public company such as legal and audit fees, along with treasury, tax and other functions that were not necessary when we operated as a wholly owned subsidiary of BMS, as well as $17.3 million of incremental costs related to our IPO and $5.3
million of litigation costs. These increases were partially offset by the positive impact of foreign exchange and reduced distribution costs.

Advertising and Product Promotion Expenses

Our advertising and product promotion expenses are influenced by the timing of our
key product launches and promotions and are increasing with our continued investment in growth for the Asia/Latin America segment.

Research and Development Expenses

Research and development expenses remained flat as compared to prior year.

Other (Income)/Expensesnet

Other
(income)/expensesnet for the nine months ended September 30, 2009, changed by $8.1 million due primarily to a favorable patent settlement of $10.0 million and gain on sale of a non-strategic intangible asset of $11.9 million,
offset by severance charges of $10.1 million and foreign exchange losses on assets held in non-functional currencies.

Earnings Before
Interest and Income Taxes

Nine Months Ended September 30,

(Dollars in millions)

2009

2008

% Change

Asia/Latin America

$

438.5

$

359.4

22%

North America/Europe

310.5

357.6

(13%

)

Corporate and Other

(182.4

)

(156.2

)

17%

Total EBIT

$

566.6

$

560.8

1%

The increase in EBIT for Asia/Latin America was driven by higher net sales and an improved gross
margin.

The decrease in EBIT for North America/Europe was primarily due to lower net sales offset partially by improved gross margins, lower
distribution costs and sales force productivity initiatives.

Expenses for the Corporate and Other segment were principally due to $21.8
million of additional costs that we now carry as a public company such as legal and audit fees, along with treasury, tax and other functions that were not necessary when we operated as a wholly owned subsidiary of BMS, $17.3 million in incremental
expenses related to our IPO and separation from BMS, $10.1 million in severance costs and $5.3 million of litigation costs. These increases were partially offset by an $11.9 million gain on sale of a non-strategic intangible asset, a $10.0 million
favorable patent settlement and the timing of operating expenses.

Interest Expensenet

Interest expensenet for the nine months ended September 30, 2009, primarily represents interest incurred on the $744.2 million 2014 Note, the
$500.0 million 2016 Note and the $500.0 million 2019 Note. Interest expensenet for the nine months ended September 30, 2008, represented interest incurred on the $2.0 billion intercompany note payable issued in August 2008.

The ETR for the nine months ended September 30, 2009, decreased to 30.1% from 35.5% for the nine months ended September 30, 2008. The lower rate was attributable primarily to benefits associated
with the restructuring of our foreign operations as part of the separation from BMS in the IPO process and the earnings mix.

Net
Earnings Attributable to Noncontrolling Interests

Net earnings attributable to noncontrolling interests consisted of an 11% interest
in MJN China and a 10% interest in MJN Indonesia held by third parties.

Net Earnings Attributable to Shareholders

For the nine months ended September 30, 2009, net earnings attributable to shareholders decreased by $11.9 million to $335.6 million compared with
the nine months ended September 30, 2008. The decrease was primarily due to interest expense and higher costs incurred as a stand-alone public company, partially offset by an improvement in gross margin and a reduction in the ETR.

Financial Position, Liquidity and Capital Resources

Overview

Our primary sources of liquidity are cash from operations and available
borrowings under our $410.0 million revolving credit facility. Cash flows from operating activities represent the inflow of cash from our customers and the outflow of our cash for inventory purchases, manufacturing, operating expenses, interest and
taxes. Cash flows used in investing activities primarily represent capital expenditure for maintenance, equipment, buildings and computer software. Cash flows used in financing activities historically have represented the transfer of cash to BMS. In
2009, cash flows from financing activities primarily represent activities related to the IPO and separation from BMS and dividends. Going forward, cash flows from financing activities will reflect any borrowings, repayment of debt and dividend
payments. The declaration and payment of dividends is at the discretion of our board of directors and depends on many factors, including our financial condition, earnings, legal requirements, restrictions in our debt agreements and other factors our
board of directors deem relevant. On September 1, 2009, our board of directors declared a dividend of $0.20 per share for the quarter ending September 30, 2009. The dividend was paid on October 1, 2009, to shareholders of record on
September 17, 2009. Cash dividends paid for the nine months ended September 30, 2009, were $61.4 million. There were no cash dividends paid in 2008.

Prior to the IPO, we did not report cash or cash equivalents on our balance sheet and BMS managed the treasury relationships for receiving and disbursing cash to cover all cash flow activity from
operations and investing activities. Following the IPO, we assumed responsibility for our treasury function, including the management and reporting of cash and cash equivalents, with support services provided by BMS under the Transition Services
Agreement. We believe that cash from operations will be sufficient to support our working capital needs, pay our operating expenses, satisfy debt obligations, fund capital expenditures and make dividend payments. In addition, we have $410.0 million
available to us under our revolving credit facility. There were no borrowings outstanding under the revolving credit facility as of September 30, 2009.

Nine Months EndedSeptember 30,

(Dollars in millions)

2009

2008

Cash flow provided by/(used in):

Operating Activities

$

416.7

$

384.0

Investing Activities

(45.8

)

(49.4

)

Financing Activities

214.3

(334.6

)

Effects of Changes in Exchange Rates on Cash and Cash Equivalents

12.2

-

Net Increase in Cash and Cash Equivalents

$

597.4

$

-

Cash flow provided by operating activities increased $32.7 million primarily due to a $47.2 million
decrease in net current assets and liabilities in 2009 compared with a $17.7 million increase in net current assets and liabilities in 2008. The decrease in net current assets and liabilities in 2009 was attributable to working capital improvement
initiatives and lower commodity costs affecting inventory and accounts payable, as well as increases in accrued liabilities and taxes payable, partially offset by a decrease in related party payablesnet. The decrease in net current assets and
liabilities in 2009 was partially offset by pension plan contributions. The increase in net current assets and liabilities in 2008 was primarily attributable to inventory builds. Net cash used in investing activities decreased slightly due to an
$11.9 million cash inflow before taxes related to the sale of a non-strategic intangible asset, partly offset by an $8.6 million increase in capital expenditures. The increase in cash flow provided by financing activities during 2009 was due to the
$782.3 million net cash proceeds from the IPO and a $97.7 million net transfer from BMS offset by, a $602.8 million repayment of related party debt and dividend payments of $61.4 million. The net transfer from BMS included in financing activities
during 2009 consisted mainly of a $286.0 million cash contribution from BMS offset by a $176.8 million settlement of related party payables. The decrease in cash flow used in financing activities during 2008 largely represents the transfer of cash
to BMS.

Cash flow provided by operating activities includes $140.9 million paid to BMS for interest expense and corporate and shared services.
Of this amount, $59.3 million of interest expense was paid from the IPO proceeds and $52.5 million of interest and $29.1 million for corporate services was paid post-IPO through September 30, 2009. Cash flow provided by financing activities
includes a $51.0 million dividend payment to BMS.

Our capital expenditures were $64.4 million for the nine months ended September 30, 2009. The cash outflow for capital expenditures was $59.3 million, reflecting additions and the increase in
accounts payables for capital expenditures. We expect our capital expenditures to increase for the remainder of 2009 for additional manufacturing capabilities, the initial investments in new information technology systems and the expansion of our
research and development facilities.

Debt

On August 26, 2008, MJN declared and issued a dividend in the form of a 10-year intercompany note to BMS in the amount of $2.0 billion, which was recorded as a reduction of equity. The note had an
annual interest rate of 6.1% with interest payments settled no less than annually.

On February 17, 2009, this related party note payable
was amended and restructured into three separate notes. The terms of these related party notes payable are detailed in the table below:

Description

Principal Amount

Interest Rate

Terms

2014 Note

$744.2 million

LIBOR + 3.0%per annum

Annual amortization of $75.0 million payable in quarterly installments 2010 to 2014, remaining principal due on February 17,
2014

2016 Note

$500.0 million

6.43% fixed

Interest due semi-annually, not subject to amortization, aggregate principal due on February 17, 2016

2019 Note

$500.0 million

6.91% fixed

Interest due semi-annually, not subject to amortization, aggregate principal due on February 17, 2019

In order to take advantage of lower available interest rates, the Company is considering options to
refinance the 2014 Note, 2016 Note and 2019 Note currently held by BMS.

On January 31, 2009, Mead Johnson Nutricionales de Mexico, S. De
R.L. de C.V., a subsidiary of MJN, entered into an agreement with BMS to lease all of the property, plant and equipment assets at the manufacturing facility in Delicias, Mexico, for 20 years. This facility is included in the financial statements of
the Company for all periods. The lease qualifies as a capital lease, and MJN will continue to carry the property, plant and equipment in the Companys financial statements. The Company recorded a lease liability of $41.5 million, representing
the present value of the minimum lease payments set forth by the lease agreement. The liability is being amortized over the lease term.

Revolving Credit Facility Agreement

On February 17, 2009, we entered into a three-year syndicated revolving credit
facility agreement (Credit Facility). The Credit Facility is unsecured and repayable on maturity in February 2012, subject to annual extensions if sufficient lenders agree. The maximum amount of outstanding borrowings and letters of credit permitted
at any one time under the facility agreement is $410.0 million, which amount may be increased from time to time up to $500.0 million at our request and with the consent of the lenders, subject to customary conditions contained in the Credit
Facility. The proceeds of the Credit Facility are to be used for working capital and other general corporate purposes.

Borrowings under the
Credit Facility bear interest either at (a) LIBOR for specified interest periods plus a margin determined with reference to our consolidated leverage ratio, or (b) a floating rate based upon JPMorgan Chase Banks prime rate, the
Federal Funds rate or LIBOR plus, in each case, a margin determined with reference to our consolidated leverage ratio. The margin on the borrowings can range from 1.125% to 2.65% over the applicable base.

Our subsidiaries may become borrowers under the Credit Facility.

The Credit Facility contains customary covenants, including covenants applicable to us limiting liens, substantial asset sales and mergers. Most of these restrictions are subject to certain minimum
thresholds and exceptions. The Credit Facility also contains the following financial covenants:

 We are required to maintain a ratio of (a) consolidated total debt to (b) consolidated Earnings Before Interest, Income Taxes, Depreciation and Amortization (EBITDA) of not greater than 3.25 to 1.0.
Compliance with this covenant is tested on the last day of each fiscal quarter and as a condition precedent to each credit extension under the Credit Facility.

 We are required to maintain a ratio of (a) consolidated EBITDA to (b) consolidated interest expense of at least 3.00 to 1.00. Compliance with this covenant is
tested on the last day of each fiscal quarter for the preceding four consecutive fiscal quarters.

In addition, the Credit Facility has
customary events of default, including (subject to certain materiality thresholds and grace periods) payment default, failure to comply with covenants, material inaccuracy of representation or warranty, bankruptcy or insolvency proceedings, change
of control, ERISA matters and cross-default to other debt agreements. The Company was in compliance with all debt covenants as of September 30, 2009.

For discussion of the Companys contractual obligations, see Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations in the Companys 2008
Annual Report on Form 10-K (2008 Form 10-K).

Critical Accounting Policies

For a discussion of the Companys critical accounting policies, see Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations in the
Companys 2008 Form 10-K.

Special Note Regarding Forward-Looking Statements

This quarterly report on Form 10-Q and other written and oral statements the Company makes from time to time contain certain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You can identify these forward-looking statements by the fact they use words such as should,
expect, anticipate, estimate, target, may, project, guidance, intend, plan, believe and other words and terms of similar meaning
and expression in connection with any discussion of future operating or financial performance. You can also identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. Such forward-looking
statements are based on current expectations and involve inherent risks and uncertainties, including factors that could delay, divert or change any of them, and could cause actual outcomes to differ materially from current expectations. These
statements are likely to relate to, among other things, the Companys goals, plans and projections regarding its financial position, results of operations, cash flows, market position, product development, product approvals, sales efforts,
expenses, performance or results of current and anticipated products and the outcome of contingencies such as legal proceedings and financial results, which are based on current expectations that involve inherent risks and uncertainties, including
internal or external factors that could delay, divert or change any of them in the next several years. The Company has included important factors in the cautionary statements included in its 2008 Form 10-K and in this quarterly report, particularly
under Item 1A. Risk Factors, that the Company believes could cause actual results to differ materially from any forward-looking statement.

Although the Company believes it has been prudent in its plans and assumptions, we can give no assurance that any goal or plan set forth in forward-looking statements can be achieved and we caution readers not to place undue reliance on
such statements, which speak only as of the date made. The Company undertakes no obligation to release publicly any revisions to forward-looking statements as a result of new information, future events or otherwise.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

There is no material change in the information reported under Item 7A, Quantitative and Qualitative Disclosures About Market Risk contained
in the Companys 2008 Form 10-K.

ITEM 4. Controls and Procedures

Disclosure Controls and Procedures. Under the supervision and with the participation of our management, including the Chief Executive Officer and the
Chief Financial Officer of the Company (its principal executive officer and principal financial officer, respectively), we have evaluated our disclosure controls and procedures (as defined in the Securities Exchange Act Rule 13a-15(e)) as of
September 30, 2009. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting. There has been no change in the Companys internal control over financial reporting that
occurred during the Companys fiscal quarter ended September 30, 2009, that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. Legal Proceedings

Information pertaining to legal
proceedings can be found in Part 1. Item 1. Financial StatementsNote 16. Legal Proceedings and Contingencies, to the interim consolidated financial statements, and is incorporated herein by reference.

ITEM 1A. Risk Factors

There have been no material changes from the risk factors disclosed in the Companys 2008 Form 10-K.

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